Law Society Council votes against referral fees
The Law Society will lobby the government and Legal Services Board to ban the use of referral fees by all providers of legal services.
The Law Society’s council voted to change its policy on referral fees yesterday. It adopted a motion by council member Sue Carter to alter council’s existing policy, which has been in place since November 2007, by a sizeable majority.
However, the Law Society’s council does not have the power to change the rules on referral fees, which as a regulatory matter must be dealt with by the Solicitors Regulation Authority.
The council’s policy will be amended so that the Law Society will ‘make representations to government and the Legal Services Board that referral fees do not have a place in markets for legal services’, and should be banned. The new policy goes on to say that referral fees ‘have the potential to limit access to justice and reduce the quality of legal services’.
Under the new policy, the Law Society will also pressure the LSB to ensure that all approved regulators ban referral fees.
Andrew Caplen, council member and chairman of the Law Society’s access to justice committee, said: ‘It is my understanding that the LSB does not regard the question of referral fees as a priority, while the SRA is likely to consult on extending the use of referral fees to publicly funded work.’
Comments
Are you a professional?
The damage has already been done. Lawyers have never been popular with the public but at least they were respected in the period before referral fees and vulgar marketing.
A ban on referrals fees and a professional publicity code should be adopted by all legal regulators.
The LSB should assist the legal profession in kicking out the parasitic spivs with a view to developing sensible genuine ways of improving legal services for the consumer whilst at the same time recognising that lawyers have clients not customers.
"The LSB should assist the
"The LSB should assist the legal profession in kicking out the parasitic spivs with a view to developing sensible genuine ways of improving legal services for the consumer".
I take it you mean the referrers and not those (now) ex-solicitors who have very publicly let down the profession in relation to Rule 1?
They may argue that the customer's interest is best served without having to go via a lawyer.
If Tesco Law does become a reality they may be proved right.
Abdication
The new landscape is clear. The LSB are the masters now and they aren't worried about referral fees. The SRA, who exercise effective power over the profession, seemingly wish to extend them.
The Council of The Law Society abdicated their power and so this vote can only be advisory.
The recession and the PII scare seem to have concentrated minds and now many must be bitterly regretting that abdication, particularly sole practitioners who must realise that their days are numbered because of the LSA 2007.
Too late. The Council of the Law Society behaves like the Duke of Windsor after his abdication. Petulance has set in and demands are being made but like the Duke, the Council has no power to enforce its demands.
Desperation
Solicitors need to modernise and catch up with the times. The best firms will embrace referral fees and gain more customers by lowering their own fees and reinvesting their profits into their firms to improve quality instead of the partners paying themselves disproportionately high salaries and bonuses.
Old fashioned solicitors who are afraid of change are now desperately trying to stifle a competitive open market by voting to ban referral fees. This is nothing short of sheer desperation and cronyism.
Not so long ago many lawyers thought that it was 'vulgar' to have a website or to advertise at all. Fortunately we have moved on and the advantages of doing so are clear to all.
A ban on referral fees will not prevent firms from collapsing if they do not modernise and become more competitive, they will crumble under the weight of their conformist, out-of-touch, conservative ideologies.
Referral Fees
It would be interesting to know the Office of Fair Trading's view on this, as the change to allow referral fees in 2004 followed pressure on the Law Society from the OFT to the effect that a ban on referral fees was anti-competitive and therefore illegal
Final nail in the coffin
I suggest that reading the latest research on how consumers cannot name a single law firm tells its own story - the legal profession is hopeless at marketing itself. Referral fees are an everyday cost associated with marketing services - outsourcing marketing services to acquire work happens in every business and if lawyers can't see that then they deserve whats coming. Most small law firms cannot afford to compete with those with deep pockets when acquiring work and a 'referral fee' or a commission for supply of work which is a more accurate way of describing this is THE only way.
Talk about shooting yourself in the foot.
In personal Injury the fact is the public still don't trust going to a law firm and feel more comfortable approaching a claims management company hence the reason they exist - the insurers know this and this is why CMC's are now actively selling claims directly to insurers or brokers. Wake up - access to justice should always involve legal input but if the powers that be can't understand how the modern world works then they have only themselves to blame - RIP
CMC'S
From working the claims management industry now for a long time i think refferel fees have helped smaller law firms who have poor or non existent marketing deparments to source work and help them survive.
I refer work to small law firms who spend considerable time getting to know the client and keep the client informed on the progress of their case regularly. larger law firms are just huge fee earning factories and client have complained that they cannot get hold of the fee earner to talk to them regarding their case.
Ultimately insurers and big law firms continue to lobby the govermant, the sra and the law society to drive away cmcs from the marketplace. what some law firms need to remember that its because of claims management companies that they have any work to do at all!. The govement must remeber the cmc's are a source of revenue for the goverment.
Referral fees
The banning of referral fees will only serve to create a black market. Surely it is better to have them out in the open and properly regulated? They are a fact of life in the legal profession and no amount of posturing will change that.
What do referral fees mean to the client?
The concise Oxford English Dictionary defines a "bribe" as being "money etc. offered to procure (often illegal or dishonest) action or decision in favour of giver".
If a person agrees to pay referral fees to another person who has made the offer would this be construed as being a bribe by the person who agrees to pay the fee even if the client understands what is meant by "referral fees"?
If a person offers to give work to another person in return for money is this a bribe even though the client knows what is meant by "referral fees"?
It would be helpful to have an agreed definition of "referral fees" from the Law Society and if referral fees are to remain that agreed definition should be stated to the client in the Rule 15 letter as a rule of practice.
Referral fees
To my mind, we ceased to be a profession when the Law Society abandoned the basic principle that we should be beholden to nobody. Maybe it is too late now to reverse that dreadful decision to allow solicitors to purchase work from third parties, but I welcome the attempt being made. Lets at least try to regain our self-respect and stop being shopkeepers. If that sounds snobbish, too bad.
I chose law as my occupation because I wanted to be a professional.
@ John Ball Your right john,
@ John Ball
Your right john, but what about those law firms which relie on refferers and will go bankrupt overnight if the cmcs stop sending them work?
As an anonymous posted has stated "this will create a black market". he is correct. By regulating the cmcs and ensuring everybody sticks to rules, and claimant solicitors getting work its a win win situation for everybody. Law firms make money, Cmcs make money, the tax man is happy.
Insurers and big law firms wont be happy, but who cares about them?. its us at the bottom of the "legal profession" that will suffer if these referrel fees are banned.
Onward to Toad Hall
I think it's about time the guards of the legal profession storm Toad Hall, defeat the rat people and install a reformed Toad back in his rightful seat.
Referral fees
I was appalled when the Law Society approved referreal fees and have lobbied strenuously against them ever since. It has taken too long for our Regulatory Body to appreciate that as Professionals and, particularly, as Solicitors, we have to apply higher standards than simply the pursuit of profits.
The payment of referral fees undermines our independence and diminishes the trust that the Public place in our profession. Our Clients would want an honest recommendation and not one influenced by payments. I consider it essential that my Clients should be aware of the independence and integrity of my Firm which, in turn, will enhance our reputation and result in greater recommendation and instructions. This is the very foundation upon which my Firm was established.